Cheat Sheet: A guide to the NLRB recess appointment controversy

President Barack Obama’s first term saw a spate of pro-labor rulings emerging from the National Labor Relations Board (NLRB), which included three Democratic members with links to unions. The board’s rulings, including regulations covering social media, union elections and right-to-work issues, worried employers and Republican legislators alike.

But that string of decisions came to a halt earlier this year when the NLRB became embroiled in a controversy over recess appointments that threatens to undo many of the board’s rulings going back more than a year. InsideCounsel’s June cover story takes a look at the NLRB in limbo, and howpoliticians, employers and attorneys are responding to the uncertainty surrounding the board.

What caused the current uncertainty surrounding the NLRB?

In January, the D.C. Circuit ruled in Noel Canning v. NLRB that President Barack Obama’s appointments of Sharon Block, Richard Griffin and Terence Flynn to the NLRB were unconstitutional because they were made while the Senate was in recess. The decision, if it stands, could invalidate the board’s decisions and rulemaking stretching back to at least January 2012—when Obama made the appointments—because the five-member board would not have had the quorum necessary to make decisions. On June 24, the Supreme Court agreed to hear the case during its fall term.

Then on May 16, the 3rd Circuit found the appointment of former NLRB member Craig Becker invalid for the same reason. Becker was selected by Obama to serve a “recess” appointment on the board from March 27, 2010 until early in 2012. This court decision casts doubt on the legitimacy of many additional board rulings.

What NLRB decisions could be invalidated if the two appeals court rulings stand?

Among the more significant decisions to be thrown into jeopardy is D.R. Horton Inc.—currently on appeal before the 5th Circuit—which struck down class action waivers in arbitration agreements. Another is the so-called “quickie election rule,” which shortens the time frame for union representation elections from 56 days to 30 days.

Has President Obama tried to fill the empty NLRB seats?

On April 9, President Obama nominated two Republicans—Arent Fox partner Harry Johnson and Morgan, Lewis & Bockius partner Philip Miscimarra—to fill the empty board spots. If the two nominations—along with the pending re-nominations of Democrats Block, Griffin and Mark Gaston Pearce—are successful, the board would still have three pro-labor members and would likely reaffirm the decisions made by the previous board. A Senate committee sent the nominations to the full Senate for approval, but some experts think that this is unlikely to happen.

“It’s fair to assume that the Republicans will continue to fight the candidacies of Block and Griffin,” says Steven Bernstein, a partner at Fisher & Phillips. “As long as that continues, we will see deadlock that at some point will have to break, or the agency will be paralyzed because it is reluctant to tackle weighty issues until this gets resolved. That hurts both sides [labor and business] by creating uncertainties about a law that is not user-friendly anyway.”

What has the Republican response to the NLRB controversy been?

On April 11, House Republicans passed the Preventing Greater Uncertainty in Labor-Management Relations Act by a margin of 219-209. The legislation would prevent the NLRB from implementing or enforcing any action that required a quorum vote on or after Jan 4, 2012, and would also require any newly confirmed board members to review all of the decisions of the previous board. But the bill’s chances of passage are slim; the Senate, controlled by the Democrats, will likely not approve the act, and President Obama has reportedly promised to veto it.

What does the uncertainty surrounding the NLRB mean for in-house and outside counsel?

Naturally, the board’s ambiguous status has made it difficult for labor attorneys to advise their in-house clients on NLRB issues. “It’s frustrating as a lawyer trying to advise his clients on how they should act lawfully,” Barnes & Thornburg Partner David Ritter says. “It’s hard to give advice in an uncertain situation.”

Michael Lotito, a Littler Mendelson shareholder, says that until the recess appointment issue is resolved, both unions and employers will have an incentive to litigate matters rather than try to settle, because they know that an unfavorable decision could be thrown out on appeal.